First up an important note:
- Your money, your decisions. This is not an advice on how you should spend your money. That’s my experience I’d like to share.
It started with FIAT
Thanks to the corona pandemic, my family and I didn't spend much the last 1,5 years for holidays, events and other leisure things. Therefore we "endet" up with about 15k$ on our bank account and looked for solutions on what to do with it.
After some research I came around the staking topic and cryptocurrencies. And after that I discovered CakeDefi, which makes it really simple to let your cryptos work for you and generate a passive income.
With the 15000$ it happened to get around 800 - 1200$ / month back, which is for my case quite impressive. Next are the steps I took:
First: The accounts
I wanted to try DeFi (Decentralized Finance) and their services like staking and liquidity mining to get rewards for „letting“ my crypto work on the chain.
I’ve chosen CakeDefi as my trusted platform for staking and liquidity mining, as I followed the founder of this platform already some years on YouTube and I think he does a pretty good job.
Altough CakeDefi is not an exchange, which means that it has only limited (and expensive) options to buy crypto and convert them to $DFI needed for the purpose of staking.
To save money on transfers and transactions I quickly opened an account on Bittrex Global which is one of the 2 known exchanges also connecting to the DeFiChain (the other one is Kucoin, but it seems that this one has some troubles with performance lately).
Second: The coins to stake
I use Bittrix to deposit my money and buy crypto like $BTC (as this is the currency I can swap there to any other coin). So done, swap $BTC to $DFI (for liquidity mining, just half of the amount should be spent on $DFI though). But as I want to stake, all goes to $DFI.
Sending $DFI to the CakeDefi platform costs around 0.1 DFI, which is amazingly cheap (my opinion).
What is staking
Staking is a consensus mechanism to make a blockchain more secure by validating transactions made on them. Bitcoin for example uses Proof of Work (PoW), which uses CPU power to solve puzzles to verify a transaction. In Proof of Stake (PoS) mechanism, people can simply lock a certain amount of coins (a “stake”) and the person who validates a block is selected by the protocol.
So I sent $DFI to CakeDefi, where I can assign them to the Staking pool. A staking pool has some advantages, as there more coins are at stake, the more transactions can be verified, the higher the rewards. Of course CakeDefi takes some % for the service - but on the other hand it is really easy to use.
A simple calculation
The current rewards APY is about 80-90%. So my calculation goes as follows:
DFI is worth about 3$ by the time of writing. So for the 15000$ I get about 5000 DFI.
Minimum reward is APY 80% so far I have seen on CakeDefi which is my worst case and the use to for this calculation:
(5000 DFI * 0.8) / 12 months = 333.33 DFI/month (keep in mind that this is additional the 5000 staked $DFI)
333.33 DFI * 3$ = 1000$ (current amount I would get if I withdraw monthly)
Third: Getting back to fiat
On CakeDefi I can decide to leave my $DFI in the pool to compound interest and it will exponentially grow, OR I decide to withdraw the rewards (in the example above it would be 333.33 DFI) to get fiat actually back to my bank account.
You always can withdraw staked coins from the CakeDefi pool, which is a great benefit I think. From the account page I can then withdraw the $DFI to my Exchange again (because in the end it is cheaper).
From the exchange I convert the $DFI to $BTC again and finally withdraw it to my bank account.
That is the story on how I earn passively a nice amount of money every month, by just letting my crypto work. Thanks for reading, and hope it was inspiring too.
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